Spain's big two banks, Santander and BBVA, were the two biggest European bank issuers

Spain's big two banks, Santander and BBVA, were the two biggest European bank issuers The concerns about exposure have seen higher costs for European banks accessing short term U.S. dollar commercial paper markets, making it more expensive for them to fund their day-to-day operations. NHL jerseys

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Ultra-conservative money market funds have already cut their exposure to Greek banks and other banks inside and outside the euro zone core are seeing a decline in commercial paper, a common short-term funding tool, data shows.

European banks' commercial paper market borrowing stood at $277 billion on Thursday, down 8 percent from the end of March.

Borrowing by Spanish banks was down 13 percent during that time to $58.4 billion, according to data from Dealogic.

Spain's big two banks, Santander and BBVA, were the two biggest European bank issuers of commercial paper in the first quarter 2010, and worries about a squeeze in funds rattled investors.

But they have been attracting funding diverted from the embattled cajas, or small regional banks. Santander raised 30 billion of new deposits in the first quarter. It also issued 15 billion euros in debt in the same period, meaning it has already raised funds well in excess of the 29.5 billion of debt maturing in 2010.

The rise in funding costs makes capital and liquidity more costly for banks just as regulators are piling pressure on them to increase their buffers.

But the European Central Bank's exceptional funding programs "means that we do not think that there will be a systemic funding crisis as there was in late 2008, " said Andrew Lim, analyst at Matrix.